These types of systems are better suited in the living room than the office. They are rarely used for more than recording/playback/timeshifting TV shows, so you really only need a 2ghz or better cpu.
Small form factor cases can be found for around the $30 mark. If you want a LCD or VFD display, you might be better off using a LIS 2 VFD, or wiring in a Hitachi 44780 compatable LCD to the generally unused parallel port and using frontview. The MCE software is availanble for around $105.

In anticipation of the Vista operating system, a lot of retailers are sweetening there low end machines by including MCE, I've seen a few for around $300 during Black Friday, and I'm sure there will be more before Xmas. Therefore, it may make sense to purchase one of the low end machines for the parts and OS, and replace them into a SFF case for your media center.

The MCE keyboard can be found for less than $60 online.

Here's a few tips to make your experience better:

1. An 80gb hard drive is ridiculus for a MCE media center. Get two drives, hold your OS, movies, videos, etc on one, and dedicate your other drive expressly for TV. The TV drive will stay fragmented after a short while, while you can keep the OS and storage drive defragmented easy. The larger the drives the better.

1. Plan for silence. Removing fans, routing airways, replacing fans, passive components, silent power supplies. Don't be surprised if you have to spend more for additional supplies to make it silent after you build it.

2. Keep the light out. LED's and lights don't add to the experience, they distract from it.

3. When building with a small form factor case, take into account the dimensions of the optical drives, as in some SFF cases the drive will block the power supply or heatsink.

2. Look for a motherboard with capacitors well away from the cpu, and as many USB ports as possible. Some silent heatsinks require a lot of free room around the CPU area, and the USB ports will get used up quick for expansion.

3. Get a dual tuner card instead of upgrading a single tuner later. Multiple single tuners have the habit of having different audio levels, making you have to turn the volume up and down when switching recordings from different tuners.

4. I disagree that the MCE keyboard is a better choice than the remote. The remote is smaller, and family members pick up on using it better. But, I highly recommend getting a long range wireless keyboard and mouse, and storing them close by. A Gyration suite is a good choice. Also, I recommend buying additional remotes, one for you, one for your spouse.

5. There are other brands of MCE remotes. The microsoft branded remote has a battery clip that's prone to breakage, it's pricier than some alternatives, and it's rather bland looking.

6. Consider getting a set of wireless gamepads if you plan on any gaming.

7. There's a open source Guitar Hero clone that can be a blast with a media center. Likewise, there are open sourced DDR clones on the net which can be played with a playstation dancemat converted with a USB adaptor. Both of these are great for when the relatives bring their kids, and your trying to enjoy the adults company elsewhere.